The latest data on the US economy has shown a higher-than-expected decline in unemployment, with 209,000 new jobs added over the course of July. This brings the headline unemployment rate down to a 16-year low of 4.3 percent, down from 4.4 percent in June. Job gains were concentrated in service industries, such as food and drink outlets and healthcare.

The numbers reflect a gradual strengthening of the US labour market, which has seen average employment growth of 184,000 per month so far this year. President Donald Trump jumped to take credit for the development.

Excellent Jobs Numbers just released – and I have only just begun. Many job stifling regulations continue to fall. Movement back to USA!

Despite Trump’s enthusiastic declaration, however, this year’s average rate of employment growth is similar to last year’s, in which 187,000 jobs were added per month. The jobs report itself downplayed the decline in unemployment, stating that: “Both the unemployment rate…and the number of unemployed persons…changed little in July. After declining earlier in the year, the unemployment rate has shown little movement in recent months.”

This said, several commentators have argued that the report underscores a labour market that shows signs of overheating, and should prompt a rate-raise from the Federal Reserve. Others, however, point to a persistently low labour participation rate and below-target wage growth as cause for restraint.

Crucially, while the record low in unemployment is a headline-grabbing announcement, it does not take into account those who have altogether given up on finding a job. For instance, Elise Gould from the Economic Policy Institute pointed out that the employment-to-population ratio for prime age Americans is still markedly low relative to pre-crisis levels, suggesting the effects of the financial crisis on labour force participation are far from over.

Indeed, a separate measure of unemployment that includes those who want to work but have given up searching as well as those who would prefer full-time work but have had to settle for a part-time schedule currently stands at 8.6 percent.

“At 2.5 percent wage growth, the Federal Reserve should get the message that there is still no worrying signs of inflationary pressure from wage growth and they should keep their foot off the brake,” said Gould.